In: Accounting
Please answer asap and double check, thanks!
Pato Company produces leather sandals. The company employs a standard costing system and has the following standards in order to produce one pair of sandals: standard quantity standard price direct materials 2 leather strips ?? per strip direct labor 2.5 hours $10 per hour variable overhead 2.5 hours ?? per hour During May, Pato purchased leather strips at a total cost of $124,520 and had direct labor totaling $117,100. During May, Pato used 18,790 leather strips in the production of sandals. Pato had no beginning inventories of any type for May. At May 31, Pato had 780 leather strips remaining in its direct materials inventory. Pato Company reported the following variances for May: Direct material price variance .............. $7,100 unfavorable Direct labor rate variance .................. $29,500 favorable Total direct labor variance ................. $8,900 unfavorable Variable overhead spending variance ......... $2,440 favorable Variable overhead efficiency variance ....... $34,560 unfavorable
1. Calculate the number of pairs of sandals produced by Pato Company in May.
2. Calculate Pato's direct material quantity variance for May. If the variance is favorable, place a minus sign in front of your answer (i.e., -5000). If the variance is unfavorable, simply enter your answer as a number (i.e., 5000).
3. Calculate the actual variable overhead cost incurred by Pato Company in May.
Data availabel | |||||||
Standard for 1 unit | |||||||
Direct material Standard | 2 leather strips @ ?? | ||||||
Labour | 2.5 hour @ 10 per hour | ||||||
Variable overhead | 2.5 hours @ ?? | ||||||
Total purchases | 124520 | $ | |||||
Total units | 19570 | (18790+780) | |||||
(units used + in stock) | |||||||
Cost per unit of material | 6.3628 | (124520/19570) | |||||
Total direct labour cost | 117100 | $ | |||||
Direct material price variance | 7100 | unfavourable | |||||
Labour rate variance | 29500 | favourable | |||||
Total labour variance | 8900 | unfavourable | |||||
Variable overhead spending | 2440 | favourable | |||||
Variable overhead efficiency | 34560 | unfavourable | |||||
1 | No. of pairs produced | ||||||
Labour efficiency variance | =(total labour variance - labour rate variance) | ||||||
Labour efficiency variance | =(8900-(-29500)) | ||||||
38400 | Unfavourable | ||||||
Labour rate variance | = (actual cost of labour) - (standard rate * actual qty) | ||||||
-29500 | =117100-(10*actual labur hours) | ||||||
Actual labour hours | 14660 | hours | |||||
Labour efficiency variance | =(actual hours - standard hours for actual units)standard rate | ||||||
38400 | =(14660 -stadrd hours)10 | ||||||
Standard hours | 10820 | hours | |||||
No. of units produced | =standard hours / hours per unit | ||||||
=10820/2.5 | |||||||
4328 | units | ||||||
2 | Material quantity variance | =(actual input - standard material for actual output)standard rate* | |||||
=(18790 - (4328*2))5.9849 | |||||||
60650.98 | Unfaourable | ||||||
*standard rate | |||||||
Material price variance | =(actual rate - stadrd rate) actual qty | ||||||
7100 | =(6.3628-standard rate)18790 | ||||||
Standard rate | 5.9849 | ||||||
3 | Acutal variable overhead cost | ||||||
Variable o/h efficiency variance | = (actual hours - std hrs) * std Rate | ||||||
34560 | =(14660-10820)* std rate | ||||||
Std rate | 9 | ||||||
Variable o/h spending variance | =Actual variable o/h- (actual hrs*std rate) | ||||||
-2440 | =Actual variable o/h -(14660*9) | ||||||
Actual variable o/h | 129500 |